Your question is probably not really in the correct area. You are asking why SSI doesn't have to pay you for what your payee embezzled. In the criminal defense area all that I can really tell you is that if your payee embezzled from you and she is prosecuted for her crimes than she would be ordered to pay restitution, which would presumably be paid to you. Of course, if she doesn't have any money and/ro can't or won't pay it than there isn't too much anyone can do excpet lock her up for violatiing a condition of probation.
If you haven't yet, I would contact SSI immediately and find out what if anything they can do or whether you have received their final answer; that they aren't going to pay you. With a huge disclaimer of I AM NOT A SOCIAL SECURITY LAWYER my best speculation is that their official position is they feel that they in fact did pay you by paying the authorized payee. They may be of the opinion that if your payee has stolen from you that that is between you and your payee and her employer. If they told you in writing that you would be reimbursed, however, than I would make a copy of that letter and go to the local office along with copies from the court showing that the criminal case was prosecuted and closed with sentencing and give that a try. Good luck.